Bill Gross: Unforeseen delevering or inflationary expansion?

THE NEW RISKS IN 2012

The financial markets are slowly imploding - delevering - because there's too much paper and too little trust. Goodbye 'Old Normal,' standby to redefine 'New Normal,' and welcome to 2012's 'paranormal.'

This process of delevering has consistently been a part of Pimco's secular thesis but "implosion" and "bimodal fat tailed" outcomes are New Age and very "2012ish." Perhaps the first observation to be made is that most developed economies have not, in fact, delevered since 2008. Certain portions of them - yes: US and euroland households; southern peripheral Euroland countries. But credit as a whole remains resilient or at least static because of a multitude of quantitative easings (QEs) in the US, UK, and Japan. Now it seems a gigantic tidal wave of QE is being generated in euroland, t...